introduction to financial accounting international
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Introduction to Financial
Introduction to Financial
Introduction to Financial
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,Chapter 1: Accounting as a Form of Communication
MULTIPLE CHOICE
1. Trailways Busline is an example of a
a. producer
b. supplier
c. retailer
d. service provider
ANS: D PTS: 1 DIF: Difficulty: Easy
REF: pp. 4-5 OBJ: LO: 01-01 NAT: BUSPROG: Communication
STA: AICPA: FN-Reporting | ACBSP: APC-03-Business Forms
KEY: Bloom's: Application
2. All of the following are examples of manufacturers except:
a. Whirlpool
b. Boeing
c. Amazon.com
d. Ford
ANS: C PTS: 1 DIF: Difficulty: Easy
REF: pp. 4-5 OBJ: LO: 01-01 NAT: BUSPROG: Communication
STA: AICPA: FN-Reporting | ACBSP: APC-03-Business Forms
KEY: Bloom's: Application
3. The three forms of business entities are:
a. Government, cooperatives, and philanthropic organizations
b. Financing, investing, and operating
c. Sole proprietorships, partnerships, and corporations
d. Wholesaler, manufacturer, and retailer
ANS: C PTS: 1 DIF: Difficulty: Easy
REF: pp. 6-7 OBJ: LO: 01-02 NAT: BUSPROG: Communication
STA: AICPA: FN-Reporting | ACBSP: APC-03-Business Forms
KEY: Bloom's: Knowledge
4. Which of the following statements would be true if you own stock in a company?
a. You are an owner of the retained earnings and capital stock of the company.
b. You have a claim to the assets of the business
c. You have the right to receive interest on an annual basis.
d. You have the right to a portion of the company’s revenues each accounting period.
ANS: B PTS: 1 DIF: Difficulty: Moderate
REF: pp. 6-7 OBJ: LO: 01-02 NAT: BUSPROG: Communication
STA: AICPA: FN-Reporting | ACBSP: APC-03-Business Forms
KEY: Bloom's: Comprehension
,5. Which of the following statements best describes the term “revenues”?
a. Revenues represent an outflow of assets resulting from the sale of goods or services.
b. Revenues represent assets received from the sale of products or services.
c. Revenues represent assets used or consumed in the sale of products or services.
d. Revenues represent the dollar amount of bonds sold to the public.
ANS: B PTS: 1 DIF: Difficulty: Moderate
REF: pp. 8-10 OBJ: LO: 01-03 NAT: BUSPROG: Analytic
STA: AICPA: FN-Reporting |ACBSP: APC-02-GAAP KEY: Bloom's: Comprehension
6. Which one of the following events involves a liability for a business?
a. Loans to be repaid to banks
b. Inventories purchased for cash
c. Amounts invested by the owners
d. Stock sold to the general public
ANS: A PTS: 1 DIF: Difficulty: Moderate
REF: pp. 8-10 OBJ: LO: 01-03 NAT: BUSPROG: Analytic
STA: AICPA: FN-Measurement | ACBSP: APC-02-GAAP KEY: Bloom's: Comprehension
7. Which of the following best describes the term “expenses”?
a. The amount of total profits earned by a business since it began operations.
b. The amount of interest or claim that the owners have in the business.
c. The future economic resources of a business entity.
d. The outflow of assets resulting from the sale of goods and services.
ANS: D PTS: 1 DIF: Difficulty: Easy
REF: pp. 8-10 OBJ: LO: 01-03 NAT: BUSPROG: Communication
STA: AICPA: FN-Reporting | ACBSP: APC-02-GAAP KEY: Bloom's: Comprehension
8. The inflow of assets resulting from the sale of products and services is called a(n)
a. asset
b. liability
c. revenue
d. expense
ANS: C PTS: 1 DIF: Difficulty: Easy
REF: p. 10 OBJ: LO: 01-03 NAT: BUSPROG: Analytic
STA: AICPA: FN-Measurement | ACBSP: APC-09-Financial Statements
KEY: Bloom's: Knowledge
9. The costs of doing business through the sale of goods and services are called
a. Net income
b. Expenses
c. Revenues
d. Dividends
ANS: B PTS: 1 DIF: Difficulty: Easy
REF: pp. 8-10 OBJ: LO: 01-03 NAT: BUSPROG: Communication
STA: AICPA: FN-Reporting |ACBSP: APC-09-Financial Statements
KEY: Bloom's: Knowledge
, 10. Which of the following best describes the term “assets”?
a. The amount of total profits earned by a business since it began operations.
b. The amount of interest or claim that the owners have in the business.
c. The economic resources of a business entity.
d. The cumulative profits earned by a business less any dividends distributed.
ANS: C PTS: 1 DIF: Difficulty: Easy
REF: pp. 8-10 OBJ: LO: 01-03 NAT: BUSPROG: Communication
STA: AICPA: FN-Reporting |ACBSP: APC-09-Financial Statements
KEY: Bloom's: Comprehension
11. Which one of the following business decisions will least likely require financial information?
a. The National Bank is reviewing the loan application from Petra’s Restaurant.
b. Petra’s Restaurant is attempting to sell its stock to the public.
c. The labor union representing Winn’s Fitness Spa employees is negotiating a pay raise as
part of a new labor agreement.
d. Petra’s Restaurant management is deciding whether to wash its catering vans today or
tomorrow.
ANS: D PTS: 1 DIF: Difficulty: Moderate
REF: pp. 11-12 OBJ: LO: 01-04 NAT: BUSPROG: Analytic
STA: AICPA: FN-Reporting | ACBSP: APC-01-Purpose KEY: Bloom's: Application
12. Which of the following would be internal users of accounting information?
a. Customers and vendors
b. Employees and managers
c. Government and banks
d. Employees and customers
ANS: B PTS: 1 DIF: Difficulty: Easy
REF: p. 13 OBJ: LO: 01-04 NAT: BUSPROG: Communication
STA: AICPA: FN-Reporting | ACBSP: APC-03-Business Forms
KEY: Bloom's: Comprehension
13. Which of the following would be classified as external users of financial statements?
a. Stockholders and management of the company
b. The controller of the company and a company's stockholders
c. The company's marketing managers
d. The creditors and stockholders of the company
ANS: D PTS: 1 DIF: Difficulty: Easy
REF: pp. 11-12 OBJ: LO: 01-04 NAT: BUSPROG: Communication
STA: AICPA: FN-Reporting | ACBSP: APC-03-Business Forms
KEY: Bloom's: Comprehension
14. Which one of the following is not an external user of financial information?
a. Company management
b. Internal Revenue Service
c. Creditors
d. Stockholders
ANS: A PTS: 1 DIF: Difficulty: Easy
REF: pp. 11-12 OBJ: LO: 01-04 NAT: BUSPROG: Communication
STA: AICPA: FN-Reporting | ACBSP: APC-01-Purpose KEY: Bloom's: Comprehension
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